(Bloomberg) -- GF Securities Co. said one of its hedge funds wiped out an amount equivalent to more than 10 percent of its profit for all of 2017 after suffering “significant losses due to fluctuations in the foreign exchange market.”
The GTEC Pandion Multi-Strategy Fund SP lost $139 million in 2018 and its net value was negative $44 million at the end of December, according to a Hong Kong exchange filing Wednesday. The loss reduced GF Securities’ net income by 919 million yuan ($137 million) -- equal to more than 10 percent of the brokerage’s profit the year prior, the statement said.
The debacle has impacted Citigroup Inc (NYSE:C)., which faces losses of as much as $180 million on loans made to a hedge fund managed by a unit of GF Holdings (Hong Kong) Corp., a person briefed on the matter said in December. That’s prompted board-level discussions and a business shakeup at the New York-based bank.
READ MORE: Citigroup Said to Face $180 Million Loss on Asia Fund Loan
The Pandion Fund, established in 2016, invested mainly in on-market equity derivatives, and has gradually expanded to buy interest-rate products, foreign-exchange derivatives and foreign-exchange volatility variance swaps. GF’s Hong Kong units may face potential litigation, according to Wednesday’s statement.
The China Securities Regulatory Commission’s Guangdong bureau has requested GF Securities enhance its internal controls, strengthen its investment in information systems and personnel, and improve risk management of overseas units, according to a separate filing Wednesday.
To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net;Bei Hu in Hong Kong at bhu5@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Katrina Nicholas, Paul Panckhurst
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